MNI China Daily Summary: Friday, April 26

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MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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GDP Beats, But Economy Appeared To Lose Some Momentum As We Progressed Through Q1

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China Q1 GDP was stronger than expected, up 1.6% q/q (forecast +1.5%), while Q4 from last year was also revised higher to 1.2% (from 1.0% originally reported). Y/Y growth came in at 5.3% versus 4.8% forecast. This keeps y/y momentum around the pace from H2 2023. Still the monthly March activity figures suggest some lost of momentum as we progressed through Q1.

  • IP rose 4.5% y/y, versus 6.0% forecast. Weakness was evident in the commodity space, while cement fell -22% y/y. Mobile phones fell as did cars (-0.2% y/y) but NEV's were still positive +33.5% y/y, but down from the pace at the end of last year. Electricity production eased back to 2.8% y/y, also off late 2023 highs of +8%.
  • The chart below overlays this production metric against y/y GDP growth.
  • In terms of retail sales, we eased back to 3.1%, against a 4.8% forecast. Consumer spending remains somewhat of a weak spot in the economy. We had slower spending related to restaurants and automobiles.
  • Fixed asset investment was better than expected at 4.5% ytd y/y (4.0% forecast). State owned enterprises continue to drive the recovery, up to 7.8%, while private enterprises saw a more modest 0.5% ytd y/y. Investment was firm across most sub categories.
  • Property investment was weaker at -9.5% ytd y/y, versus -9.0% in Feb. The detail showed continued deep y/y falls across the sub-categories. New home sales fell -30.7% ytd y/y.
  • The jobless rate edged down to 5.2%, in line with forecast (prior was 5.3%).

Fig 1: China Electricity Production & GDP Growth Y/Y

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China Q1 GDP was stronger than expected, up 1.6% q/q (forecast +1.5%), while Q4 from last year was also revised higher to 1.2% (from 1.0% originally reported). Y/Y growth came in at 5.3% versus 4.8% forecast. This keeps y/y momentum around the pace from H2 2023. Still the monthly March activity figures suggest some lost of momentum as we progressed through Q1.

  • IP rose 4.5% y/y, versus 6.0% forecast. Weakness was evident in the commodity space, while cement fell -22% y/y. Mobile phones fell as did cars (-0.2% y/y) but NEV's were still positive +33.5% y/y, but down from the pace at the end of last year. Electricity production eased back to 2.8% y/y, also off late 2023 highs of +8%.
  • The chart below overlays this production metric against y/y GDP growth.
  • In terms of retail sales, we eased back to 3.1%, against a 4.8% forecast. Consumer spending remains somewhat of a weak spot in the economy. We had slower spending related to restaurants and automobiles.
  • Fixed asset investment was better than expected at 4.5% ytd y/y (4.0% forecast). State owned enterprises continue to drive the recovery, up to 7.8%, while private enterprises saw a more modest 0.5% ytd y/y. Investment was firm across most sub categories.
  • Property investment was weaker at -9.5% ytd y/y, versus -9.0% in Feb. The detail showed continued deep y/y falls across the sub-categories. New home sales fell -30.7% ytd y/y.
  • The jobless rate edged down to 5.2%, in line with forecast (prior was 5.3%).

Fig 1: China Electricity Production & GDP Growth Y/Y

Keep reading...Show less